Every day Virginians go to their water taps and expect to obtain clear, safe, and abundant water for drinking, washing, bathing, and other domestic needs. The good news is that in most cases, when water is obtained from a public water-supply system, this happens. However, all public water-supply systems are not created equal. While the United States produces more and better quality water than any other country in the world, the great challenge of small drinking-water systems is to become full members of the water-supply industry.

BACKGROUND

The United States Environmental Protection Agency (EPA), the states, and others interested and involved in the provision of safe drinking water to consumers on public water-supply systems have expressed concerns related to small public water-supply systems. The Safe Drinking Water Act (SDWA) Amendments of 1996 (PL 104-182) address many of these concerns.

The major concern is the ability of a small public water-supply system to maintain adequate financial, operational, and managerial resources to assure the long-term viability of the water system. This and other concerns are rooted in several facts.

First is the large number of small public water-supply systems in the nation. Of the approximately 58,000 community public water-supply systems, approximately 87 percent--about nine of every 10 are small, serving 3,300 persons or less. Second, the number of small public water-supply systems has, on a national level, grown more than seven-fold since 1963. Third, approximately 90 percent of the violations occur at small public water-supply systems.

In spite of these statistics, one should recognize the important role small water systems play in the provision of drinking water. Small public water-supply systems exist where larger systems may be unable to supply service. For example, small systems most often provide drinking water to rural, isolated areas. These systems also serve as the economic backbone of many rural areas in the country. The problems faced by small public water-supply systems are much greater, in proportion, than those faced by many of the larger public water-supply systems. Some of these problems will be identified in this article. Immediate solutions will be difficult to find, and possible longer-term solutions are now being formulated under the 1996 Amendments. To begin resolving the problems, we must understand their nature.

WHAT IS A PUBLIC WATER SUPPLY?

A public water-supply system is defined in both state and federal law and regulation as a water system that serves at least 15 connections or 25 individuals for at least 60 days of the year. In Virginia, public water-supply systems are termed waterworks. The definition provides areas for further clarification. Water systems that serve fewer numbers or serve over 15 connections or 25 individuals for less than 60 days are termed non-public water systems. The term public is not to be confused with the ownership of a waterworks. Waterworks can be owned by any individual or group. Another way to express this is that these are publicly regulated water systems. Examples include public service authorities, cities, associations, corporations, the federal government, private investors, towns, counties, the state, and others.

WHAT ARE THE TYPES OF WATERWORKS?

Waterworks are divided into two main categories: community waterworks and non-community waterworks, or, more simply, those serving a residential population and those serving a nonresidential population. Community waterworks, which serve year-round residents, typically are those serving towns, cities, counties, subdivisions, and manufactured home communities. All are served by a central water system and not individual home wells.

Noncommunity waterworks are those that do not serve year-round residents. Typical examples include schools, factories, restaurants, and hotels or motels, all of which must have their own sources of water supply. Such a source is typically a well located in the vicinity of the service area.

Noncommunity waterworks are further subdivided into non-transient noncommunity (NTNC) waterworks and transient noncommunity waterworks (TNC), with the NTNC serving a less mobile population, or, as law describes, "the same population for at least six months out of the year." Schools and factories that provide drinking water from their own sources of supply constitute the majority of NTNC waterworks. TNC waterworks serve more than 25 of the same individuals for more than 60 days but less than six months during a year.

VIRGINIA'S WATERWORKS AND THEIR REGULATION

Currently, Virginia has approximately 1,600 community waterworks, 650 NTNC waterworks, and 1,800 TNC waterworks. These and, indeed, all public water-supply systems in the United States are subject to federal law and regulation. Under the Safe Drinking Water Act, the EPA is responsible for establishing drinking-water standards, which include maximum levels for certain constituents in drinking water; how often these must be monitored; what must be done if the standards are not met; and, in certain situations, what types of treatment must be applied.

The EPA is authorized to enforce these standards in the absence of state action, but the SDWA provides a mechanism by which states can maintain primary enforcement responsibility (primacy). To obtain primacy, a state must enforce regulations at least as stringent as federal law and regulation. Forty-nine of the 50 states currently have primacy. Virginia was awarded and has maintained primacy since 1977, with the Virginia Department of Health (VDH) serving as the commonwealth's primacy agent for the SDWA. In general, community and NTNC waterworks fall under the supervision of the VDH's Division of Water Supply Engineering (DWSE), Office of Water Programs, and the TNC waterworks are supervised by the Office of Environmental Health Services through local health departments.

SMALL WATERWORKS AND THEIR OWNERS

To those who deal with waterworks, it seems that there are as many definitions of "small" as there are stars in the heavens. One of the most widely used and accepted definitions of a "small" waterworks is one that serves fewer than 3,300 persons, which is the definition that will be used throughout this article.

In Virginia 90.2 percent of community waterworks fall within the small waterworks classification. The DWSE provides technical assistance to and regulatory oversight for approximately 1,400 small community waterworks. By contrast, these 1,400 community waterworks serve only 7.7 percent of those Virginians served by community waterworks.

Likewise, a distinct difference exists between the types of ownership of small waterworks and large waterworks. Approximately 70 percent of the small community waterworks are investor owned. Investors usually are individuals, groups of individuals, companies, or corporations and typically include owners of manufactured home communities, owners of subdivisions, realtors, or investment companies. These investors find themselves to be waterworks owners even though that may not be their primary intent.

By contrast, only 7.3 percent of the larger community waterworks are investor owned. The remainder, by far, are owned by local and state governments, including authorities.

As noted earlier, small waterworks serve a very important place in providing drinking water to less urban areas of the state that have lower population densities. Yet, because of their very nature, small waterworks encounter unique disadvantages and challenges.

PRIMARY CHALLENGES FOR SMALL WATERWORKS

The greatest challenge facing small waterworks is the lack of technical, managerial, and financial capabilities. These waterworks serve some of the most rural and economically depressed areas of the state. Furthermore, many owners of small waterworks did not set out to establish a waterworks but to develop a manufactured housing community, a subdivision, or a particular business. Therefore, the owners find that providing supervision and resources to maintain a waterworks is a nuisance. The commitment and oversight required to provide a safe and reliable source of drinking water was not often fully considered. A limited economic base and the lack of economy of scale result in unscheduled maintenance and require repairs that become a financial strain upon the owner.

Basic daily operations of a small waterworks provide challenges to their owners. For example, the owner of a small subdivision may hold a full-time job. The last thing he or she wants to do upon returning home from work is to devote several more hours to the upkeep and preventative maintenance of the waterworks. So these important jobs often remain undone, leading to the possibility of a catastrophic waterworks failure. Such failures quickly drain the waterworks, leaving consumers without water and angry.

If the waterworks includes treatment or serves a prescribed number of persons, the owner must have a waterworks operator licensed by the Board for Waterworks and Wastewater Works Operators, Virginia Department of Professional and Occupational Regulation. While employing a licensed operator will help ensure the adequate and efficient operation and maintenance of the waterworks, the cost of a licensed operator must be reflected in the operating costs. Operator requirements must balance the need for increased public health protection with the financial capability of the waterworks.

Another challenge faced by owners of small waterworks is that of securing a licensed professional engineer when the need arises. Under Virginia law and for the protection of public health, the construction of any new waterworks or the modification of an existing waterworks in a way that affects the treatment of the water or the hydraulics of the waterworks requires the submission of engineering plans and specifications developed and signed by a licensed professional engineer. Owners of small waterworks may also need the assistance of other professionals, such as accountants or lawyers. The costs for securing these professional services often exceed the financial capabilities of the small-waterworks owner.

The SDWA and the Virginia Waterworks Regulations require a great deal of drinking-water quality testing and reporting for each waterworks. Keeping up with these requirements and assuring that the tests are collected in a timely fashion provide a great challenge for the small-waterworks owner. The challenge grows when a required sample is not collected or a drinking-water standard is exceeded. The owner must then provide a public notice to his or her consumers pointing out this failure. The notice must indicate any increased risks to the consumer, necessary preventative actions, and the owner's actions to correct the deficiency.

These, then, are some of the broader and more significant issues facing owners of small waterworks. The list is not all inclusive, and these problems are not specific only to small waterworks in Virginia.

ANSWERING THE CHALLENGES OF SMALL WATERWORKS

Recognizing the vast number of small waterworks and the special attention they need, Congress passed and the President signed the SDWA Amendments in August 1996. Several new bold and innovative provisions of the 1996 Amendments encourage and give guidance to the states to build the capacity of small waterworks. The states have a great deal of flexibility in applying a wide range of methods and tools to help owners of small waterworks. In Virginia the Department of Health is currently implementing various strategies and programs to make life easier for these people.

Drinking Water State Revolving Fund Program

For the first time in the history of the SDWA, Congress has authorized federal dollars to establish a fund, known as the Drinking Water State Revolving Fund (DWSRF), to issue loans (and grants) to help waterworks meet pressing public health, regulatory compliance, and financial needs. Small waterworks are particularly targeted for these funds, with 15 percent of the financial assistance to go to waterworks serving a population of less than 10,000 persons. In addition to issuing construction loans, the 1996 Amendments allow states to "set aside" up to 31 percent of the DWSRF Program grant non-construction funds to assist states in the administration of the program and to provide assurances that the loans will be issued to those waterworks with the greatest needs and likelihood of success. Congress established three basic principles for the states to use in establishing a loan and grant priority system: correction of health threats, correction of violations, and financial need of the applicant. For the first year of the DWSRF Program, Congress authorized and appropriated $1.25 billion nationwide. Each state must provide a 20-percent match based on the total federal allotment. For the first year only, states can delay deposit of the match until September 1999.

Virginia's share of federal money for the first year is almost $30 million. The 1997 General Assembly chose to delay the first year's match requirement. The VDH, selected as Virginia's applicant for the federal money, chose to utilize 22 percent of the revolving funds as set-asides. This allows the remaining 9 percent of unrequested set-asides to be deposited into the state construction loan fund. Virginia established the Virginia Water Supply Revolving Fund in the late 1980s to issue construction loans. Before the DWSRF Program, $600,000 had been appropriated to this fund by the General Assembly. On March 7, 1997, VDH applied for the capitalization grant to fund the DWSRF Program.

Another unique aspect of the DWSRF Program is the ability of states to make loans to investor-owned waterworks. This provision clearly indicates Congress's concerns with respect to small waterworks. Because small waterworks are so plentiful, since most are owned by non-governmental entities, and since all of us consume drinking water from waterworks of this type at some point in our lives, Congress determined it to be in the best interest of the consuming public that these waterworks be loan-eligible.

The creation of the DWSRF Program highlights the critical importance of assuring that owners of small waterworks have the capacity to effectively use a public loan or grant. For this reason, the 1996 Amendments place considerable weight on improving the technical, managerial, and financial capacities of the owners of small waterworks.

While adequate financing may be a strong ointment in alleviating some of the issues facing small waterworks, it is, in and of itself, insufficient to make owners of small waterworks full partners in the great tradition of quality provided by the United States water-supply industry. All the financial capital in the world would be misspent if there were not the managerial and technical capacities on the part of owners of small waterworks to ensure that the infusion of capital would effectively result in improved reliability and quality of drinking water to the customers served by small waterworks.

Capacity Development

The 1996 Amendments require states to develop plans that would assure the capability of waterworks (especially small waterworks) owners to adequately operate their waterworks into the foreseeable future. The 1996 Amendments call this "Capacity Development." In Virginia, it is called a "Comprehensive Business Plan." In both cases, the intent is the same that is, to assure that owners of new waterworks have the financial, managerial, and technical capabilities to remain viable into the future. If the state finds an applicant for a new waterworks unable to meet these requirements, the application is rejected and the waterworks cannot be built.

Defining the capacity criteria of small waterworks and the strategies to achieve them is also of critical importance to owners of existing waterworks. The 1996 Amendments require states to establish criteria for technical, managerial, and financial capacities for any waterworks owner applying for financial assistance under the DWSRF Program and encourage and provide incentives to state programs to establish Capacity Development Programs for existing waterworks as well.

The Comprehensive Business Plan is also to be applied to any waterworks that is on the priority funding list for a waterworks construction loan. If an existing waterworks owner cannot show that the loan will make the waterworks viable, then the loan cannot be awarded to that particular applicant.

Authority to require a business plan was granted to the VDH by the 1994 General Assembly. The DWSE introduced its Comprehensive Business Plan in the fall of 1996. If a state fails to adopt a Capacity Development Plan as required by the 1996 Amendments, the EPA can withhold up to 20 percent of the DWSRF Program.

The EPA is currently developing guidelines for the acceptable contents of a Capacity Development Plan. While the final language has not yet been completed, we do have a sense of what the EPA is encouraging states to develop.

The EPA will likely suggest that owners of small waterworks demonstrate that they have the overall ability to exercise technical, managerial, and financial capacities. The 1996 Amendments place great emphasis on prevention of water-system problems. Capacity development will reduce the number of violations by small waterworks and improve the public health.

Technical capacity refers to the ability to manage the infrastructure of the system, the adequate protection and treatment of the water supply source, and the distribution of safe water to all consumers. Questions to determine the technical capacity might be, Does the waterworks have access to a safe and reliable water source? What is the condition and life expectancy of the water lines? Does the owner or operator have the knowledge necessary to safely operate the waterworks?

Managerial capacity refers to ownership accountability, record keeping, billing, and staffing. Questions to determine managerial capacity could be, Who has clear ownership of the waterworks (not always an easy question to answer for small waterworks)? How does the owner interact with customers concerning billing questions or problems? How quickly are complaints handled? Are they handled satisfactorily?

Financial capacity refers to the sufficiency of revenues from the waterworks and all the financial controls necessary for safe and responsible management. Questions to determine financial capacity might be, Are adequate books and records kept? Is the waterworks owner use appropriate budgeting and financial planning practices?

Operator Certification

The 1996 Amendments provide tools to assure the adequate and continued operation of waterworks, including the assurance that someone trained in the concepts of water treatment and system operation will operate the system. The EPA is still developing guidelines for state operator-certification programs. Virginia has had an operator licensure program for a number of years and anticipates only a minor effect upon this program as a result of the new guidelines.

Source Water Assessments

Each state is required to perform an assessment for each source of water used by a waterworks, including groundwater (wells and springs) and surface-source intakes. The guiding principle for the assessment is to ensure that all waterworks are evaluated to determine their vulnerability to contamination from nearby sources. The loss of a source due to extreme contamination obviously provides a setback for the waterworks owner, the customers, and those charged with identifying the source of contamination and finding an alternative source of supply. Additionally, the concept of a source assessment is to protect all investments made in each waterworks.

The requirements of source-water protection plans are currently being discussed by the EPA and involved stakeholders. Due to the fragmented nature of groundwater authority, both within the state and federal governments, Congress allowed extra time for the development and implementation of this provision.

WHERE DO WE GO FROM HERE?

To meet the challenges facing the small waterworks, we must all understand where we are and what tools are available to use in reaching our desired goal. That goal is the provision of safe and adequate water supply to all citizens of Virginia, without regard to the location of residence within the commonwealth or to personal financial situations.

Congress has given waterworks owners an opportunity to address and correct the problems that have plagued us for so long. It will require commitment, patience, understanding, and trust for us to reach the goal that Congress envisions. Clearly, the states have been given a greater role in guiding the future of the waterworks community. The state will, therefore, look to its citizens for input and assistance.

Meeting the needs of small waterworks will require much from everyone. Owners of small waterworks must see themselves as an important part of the waterworks industry. They must be willing to manage their waterworks as small businesses, not as an afterthought. State and federal regulators must follow through on their recognition that very small waterworks face terrific institutional and economy-of-scale barriers and that programs and assistance must be tailored to fit very specific needs: one size does not fit all.

Finally, the public, as drinking-water consumers, has the responsibility to recognize that the provision of safe drinking water does not come for free, nor can it be taken for granted.

The future is bright for small waterworks. We now have more financial assistance and management tools available for the needs of small waterworks than ever before. Change for the better will come, but it will come slowly.

All of us can play a part in bringing needed changes to the waterworks that serve us. First, we can become knowledgeable about and interested in our waterworks. What is its source(s) of supply? Is the water treated in any way? Do problems exist that need attention? How can we help?

While there are no "silver bullets" that will correct all problems at all waterworks, some basic steps can be taken. Some of these steps may involve little or no cost to the waterworks owner.

All waterworks owners should join an organization or organizations that represent the interest of the waterworks. Several such organizations are active in Virginia. By working with and through these organizations, owners can become better informed about issues and technology that might affect their waterworks. They can become aware of other available resources, and, most importantly, they can network with others who face the same challenges and dilemmas.

Some waterworks in other states have begun mentoring programs. Such programs involve larger waterworks in working with smaller waterworks to provide operational, managerial, and financial advice. This program has had moderate success in areas where it has been tried. One disadvantage to this type of assistance could be the extent to which the mentors were liable if their best advice should lead to a violation or unexpected costs. Perhaps the waterworks industry, in concert with the state legislature, could draft "Good Samaritan" language that would protect a waterworks owner giving advice in good faith.

A closely related activity could be the formation of a coalition of retired water-supply professionals. These retirees have many years of experience in state, federal, and local governments as well as in consulting, engineering, training, and business. A catalyst organization or organizations would be needed to assess the availability of qualified retirees, the need for help at specific waterworks, the funding needed to provide stability and longevity to this concept, and the coordination of these efforts. Again, some measure of liability protection for good-faith recommendations would be required.

Contract operations and management of waterworks are beginning to gather momentum. Under this scenario, a firm offers to operate and manage the waterworks in place of the owner. This is particularly attractive to those waterworks owners who never intended to enter the waterworks business but found themselves to be owners nonetheless. A contracting firm could oversee a sizable number of small waterworks within a specific geographical area. Great care must be taken to ensure that such a firm does not overextend its capacity to provide prompt, accurate, and continuing care to its clients.

Connection of smaller waterworks to larger waterworks is another method to address the small-system issue. It may be possible for one waterworks to physically connect to another waterworks. Physical connection is a function of proximity, availability of water from the host waterworks, and the willingness of the smaller waterworks to sell its connections. Sometimes, the owner of a smaller system may place an unreasonable price on the value of the system when it is perceived that another waterworks may be interested. While this is not illegal, it has, in the past, thwarted attempts by an interested waterworks and the VDH to transfer ownership from a struggling waterworks owner to one with a proven track record.

Current cost-reduction programs must be continued. The VDH provides technical assistance and sanitary surveys of all public water supplies. While the VDH is also a regulatory agency, its primary mission is to work with waterworks owners, rather than through enforcement actions, to achieve and maintain compliance. In addition to the technical assistance provided by the VDH, the Virginia General Assembly has provided funding for the Division of Consolidated Laboratory Services (state laboratory) to provide no-cost analyses for virtually all required drinking-water testing by waterworks. Those testing requirements that were not provided funding are being considered for funding from the DWSRF set-asides. The services provided by the VDH and the state laboratory have saved Virginia waterworks customers millions of dollars. Many other states do not provide this same level of service, and the associated costs are borne by increased water rates to the customers.

It is the philosophy of all waterworks professionals in Virginia that the greatest impact on small systems can come only from providing professional, reasoned, and reliable leadership. The consumers of water in Virginia can rest assured that the industry will reach a higher benchmark through leadership rather than coercion.